If You Want Higher Wages You Need Stronger Unions

Tory guru Steve Hilton has had a revelation: low pay causes poverty. From one Steve to another, welcome to the real world. But as your party is about to unveil its first full blue-blooded Tory Budget in 19 years you need to think a bit more about what - and who - drives poverty in this country... The scale of cuts - the deepest yet to our public services and benefits - will hit all but the very wealthiest. Women, the disabled, the low-waged, those not in work, those who need help with ever-spiralling housing costs and children will not be spared.

Tory guru Steve Hilton has had a revelation: low pay causes poverty. From one Steve to another, welcome to the real world. But as your party is about to unveil its first full blue-blooded Tory Budget in 19 years you need to think a bit more about what - and who - drives poverty in this country.

Of course really Cameron and Osborne have been in government for five years already. Their austerity economics has brewed together chronic cuts, privatisation and scapegoating of benefit claimants and migrants. Insecure, precarious work has grown unabated under their watch. So when last week Cameron announced he now wants to see a "higher wage, lower tax, lower welfare" society, alarm bells ring over exactly how he will reach this utopia.

The scale of cuts - the deepest yet to our public services and benefits - will hit all but the very wealthiest. Women, the disabled, the low-waged, those not in work, those who need help with ever-spiralling housing costs and children will not be spared.

Not for Messrs Osborne and Cameron any reflection on why their policies have caused the slowest economic recovery with the deepest decline in living standards crisis on record - not to mention that they've missed every target they set themselves on both the debt and the deficit.

Nor were we were not told where the £12billion axe would fall during the election, perhaps because the Conservatives would have had to spell out exactly what is in store for our neighbours, colleagues and communities. And served up with the cuts is a good dose of fear with the Queen's Speech announcement that the screw would tighten further on our civil liberties and trade unions.

It really doesn't have to be this way. To vilify trade unions is to belittle the largest democratic organisations in society, their six million people as members and our evident role in delivering a fairer deal for people. In the private sector, trade union organised workplaces have pay eight per cent higher than non-union workplaces. So Mr Cameron, if you are genuinely interested in the fight against inequality, back us when we take it to the workplace.

As the more laws shackle unions, employment rights are weakened, and the structures supporting good industrial relations and collective bargaining are dismantled so too have the wages of middle and low earners stagnated. Inequality has grown, and we have seen the share of GDP going to workers as wages shrink since right-wing economics took hold in the late 1970s.

Even the IMF - hardly the bastion of dangerous reds - warns that "If the income share of the top 20% increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20% is associated with higher GDP growth"

Now, such is the extent of low pay in this country that £11billion is spent through the benefit system and tax credits to help struggling workers make ends meet. For too many, work does not pay - witness the foodbank where more queuing are in work than not.

But 'lower welfare' for this government does not mean mounting an assault on the cause of the struggle but rather on those struggling. So instead of addressing the 'corporate welfare' dependency, it chooses the route that is cowardly. It is also cruel. The proposed cuts to Child Tax Credits will leave a low paid two child family £1,690 a year poorer. It will plunge 300,000 more children into poverty.

Further, the government is currently piloting 'in-work sanctions' - where benefits are stopped if people in work do not - more usually, cannot - increase their hours or pay. But no obligations are being placed on employers to increase hours or pay - it is just another way of putting the blame on individual working people.

A member of my union told me that where he works, in a famous-name pizza delivery firm, some colleagues have been on zero hours contracts for seven years. Week to week they have no idea what they will earn, if they will earn. Having a family is a pipe-dream - having a holiday would be a start. Cutting housing and tax credit support will snare people like him in deep poverty.

Warm words 'encouraging' employers to pay more is a grotesque insult when the government will bring ruin to millions of people whose only crime is to be poorly paid. Remember people affected are not some strange 'other' - they are the woman next to you on the bus, the young man who just served you in the shop, the man who is looking after your aging parent or who is helping your child learn to read.

And in this context of course, a 'lower tax' economy can work - if you are wealthy or a tax-averse corporation like Amazon making £5.3billion from sales in Britain but coughing up only £12million in tax. We want tax justice that goes hand in hand with social justice. The economist Howard Reed has shown that an increase in the National Minimum Wage to £8 an hour immediately would create a net increase of 30,000 jobs and improve the public finances. (Yes, it would reduce the welfare bill, too.)

We could go better - £10 an hour. Investment, not cuts and destruction. Enabling, not attacking, trade unions to support people play their part and get their fair share. Higher wages and decent work for all. Then we really do start to build an economy for all.